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How to calculate your marketing ROI

Are you running campaigns in AdWords, Facebook or on another advertising platform? Do you know whether your marketing efforts are paying off and which channels you should keep investing in to increase your product sales?

As marketers face more and more pressure to demonstrate that their activities are contributing towards the profit, there is a bigger need for you to be able to show your decisions yield positive results.

But if a particular channel or campaign is doing the opposite and causing your business losses, then the sooner you figure that out, the quicker you’ll be able to adjust your further marketing plans.

That’s where calculating and tracking your ROI becomes important. By being able to figure out how much you make from investing into a particular campaign or channel, you can figure out where to focus your budget.

Whilst it’s difficult to compare the performance of specific marketing tactics across every single industry and company, there are interesting conclusions that have come out from market research. As reported by Web Strategies Inc., the top 3 channels that generated the best ROI were email marketing, SEO / organic search and content marketing.

Email marketing has also been reported elsewhere to give the best ROI (source: Campaign Monitor), but you should focus on figuring out the correct ROI for your marketing activities and, based on that, decide which ones work for you best.

Violetta

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On most websites, the conversion journey involves many different routes and across many sessions: few customers buy from the first advert.
You may have heard of the ‘rule of 7’. In reality, it varies from maybe 2 or 3 touches for a $20 purchase and definitely more than 10 for an enterprise business service. Your company is buying prospects (or traffic) from a number of online channels, and in many cases, it will be the same potential customer coming from different sources.
To be able to report on this in Google Analytics, we need to get the basic setup correct.
Tagging campaigns for attribution
The first step is to make sure that the different traffic sources can be compared in a multi-channel report are consistent and have complete inbound link tagging. Be sure to tag your campaign correct with our URL Builder.
Some tools (such as Bing or Mailchimp) have options to turn on link tagging for GA - although it's buried in the settings. With many others, you will have to add the necessary ‘UTM’ parameters onto the link.
Without this tagging, many sources will be misattributed. For example, affiliate networks could send referrals from any of thousands of websites which will appear under the ‘referrals’ channel by default. Facebook ads, since the majority come from the Facebook’s app, will appear under the ‘direct’ (or ‘unknown’) channel.
From when full tagging is in effect, the channels report will start to reflect your genuine traffic acquisition source. But don’t expect a 100% match with other tracking tools – see our article on Facebook – GA discrepancies.
Importing cost data
The cost for any Google AdWords campaigns can be imported automatically, by linking the accounts, but for any third party campaigns, you will need to upload a spreadsheet with your costs on.
The benefit is that now you can see the return on investment calculation update in real-time in the multi-channel reports.
Model attribution
The final step is to decide how you will attribute the value of a campaign if it forms part of a longer conversion pathway. The default for Google Analytics (and most others) is ‘last non-direct click’. That means that the most recent TAGGED campaign gets all the credit for the sale. If the user clicks on 5 Facebook ads, and then eventually buys after an abandoned basket email reminder, that email reminder will get all the sales (not Facebook). This attribution is what you’ll see in all the standard campaign and acquisition reports.
You may feel that it is unfair on all the work done by the earlier campaigns, so ‘linear’ (sale equally credited to all tagged campaigns) or ‘time decay’ (more recent campaigns get more credit) may be a better fit with your businesses’ goals.
Conclusion
Multi-channel marketing performance attribution is not a luxury for the largest companies. It’s available to you now, with the free version of Google Analytics. It will require some setup effort to get meaningful reports (as with any measurement tool) but it has the power to transform how you allocate budget across a range of online marketing platforms.
But if this still is not working for you then you may have a problem with cross domain tracking.
Need a bit more advice or have any questions? Get in touch with our experts or leave a comment below!
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For two decades the ecommerce customer journey has stayed roughly the same. Customers browse, add to cart, checkout, and then see a page confirming their purchase: the 'thank you' page. That last step is changing, and this is no small change as it threatens to break how many sites measure purchases.
Ecommerce stores that stop using a final 'thank you' page without adjusting their analytics setup accordingly are in danger of getting inaccurate purchase data, or even losing track of shoppers altogether.
In order to help our customers get ahead of the curve, we've gone through a number of test cases to find short and long term fixes to this issue. But first, a little history.
In the old days...
In the early days of ecommerce the biggest barrier during checkout was trust. Retailers paid to be certified as ‘hack-proof’ and customers wanted to make quite sure when and how their money was taken.
Fast forward twenty years to today, and in the developed world most consumers have transacted online hundreds of times. They are familiar with the process, expect a seamless user experience, and confident that when they click 'buy' their payment will be taken and the products delivered.
Online shoppers are so confident, in fact, that an increasing number we observe don’t even bother waiting for that ‘thank you for your order’ page. That page is becoming redundant for three reasons:
Almost every checkout process captures an email address to send an order receipt to, and the email acts as a better type of confirmation: one that can be searched and referenced. Seriously, when was the last time you opted to ‘print the confirmation page’ for your records?
Many retailers are forced to compete with the superb customer support offered by Amazon. This includes refunds for products that were ordered in error, and quick handling of failed payments. So from a customer's perspective there’s little point in waiting for the confirmation page when any issues will be flagged up later.
Which leads to the third reason: as retailers improve the speed of checkout, the payment confirmation step is often the slowest, and so the one where customers are most likely to drop out on a slow mobile connection. This is no small issue, as mobile revenues are expected to overtake desktop revenues for ecommerce businesses globally this year.
What does this mean for ecommerce sites?
The issue is that for many sites the linking of sales to marketing campaigns is measured by views of that ‘thank you' page. In the marketing analysis, a ‘purchase’ is really a view of that 'thank you' page - or an event recorded on the customer’s browser with the sale.
If customers don’t view the page, then no sale is recorded.
If you have ever been frustrated by the lack of consistency between Google Analytics and your own payment/back-end records, this is the most likely issue.
A dependency on viewing the 'thank you' page brings other problems too: a buggy script, perhaps from another marketing tag, will block the recording of sales. This is another source of the type of analytics inaccuracy which the Littledata app combats automatically.
How to adjust your ecommerce tracking
The short-term fix is to tweak the firing order of marketing tags on the 'thank you' page, so that even customers who see the page for fractions of a second will be recorded. Sites with a large number of marketing tags will have the greatest room for improvement.
But in the long term, as this trend continues, the analytics solution is to link the marketing campaigns to the actual payments taken. This removes the need for the customer to see any type of 'thank you' or confirmation page, and also removes discrepancies between what your marketing platform tells you was purchased and what actually got bought. This is known as server-side tracking.
The good news for those of you on the Shopify platform is that our Shopify reporting app does this already - and solves a lot of other analytics problems in one install.
For those on other stores, please do contact us for advice. The Littledata team has worked with ecommerce businesses to set up integrations with Magento, DemandWare and numerous custom platforms. Not only can we help fix your analytics setup for accurate tracking, but our app then automates the audit and reporting process for all of your sites going forward.